Portfolio · Investing Glossary
What Is Total Return?
Investment performance including both price appreciation and income (dividends/interest).
The Full Definition
Total return measures the complete performance of an investment — combining price appreciation (or depreciation) with any income received, such as dividends or interest payments. A stock that rises 5% in price but also pays a 3% dividend has a total return of 8%. Total return is the correct metric for evaluating investment performance, as focusing on price alone ignores a significant source of long-term wealth creation.
Real-World Example
Between 1930 and 2023, the S&P 500's price return was significant — but its total return (with dividends reinvested) was dramatically higher. Dividends accounted for roughly 40% of that total return over the period.